ADE requires true small caps and does not recognize emulated small caps.

The usual (MS) fonts lack a true small cap font though. So, if you want to add true small caps, you should consider using embedded fonts. But some e-readers don't recognize embedded fonts. A catch 22 problem...

If your headers have small caps, they should be recognized as such but you must give them in the CSS stylesheet not only a font-variant:small-caps but mainly a font-family with small-caps support. The span element is required only for text within a paragraph.

Now that I have been pretty unclear, I let you consider one EPUB like the joint one. It makes use of embedded fonts, small-caps for titles and part of text. Could be an example of what I meant to say.

If you want the best possible small caps, find a good body font family that also has a small caps variety and use them.

Find a good FREE font family that also has small caps and use them.

1.5 Embedding of the Font Software into electronic documents or Internet pages is only permitted under the absolute assurance that the recipient cannot use the Font Software to edit or create a new document (read-only). It must be ensured that the Font Software cannot be fully or partially extracted from said documents.

As for a free pd font with all caps, I use garava font from aimwell.org. Google garava font. It's a very comprehensive font family with several varations including smallcaps.

Charis SIL is the font that most publishers use when they embed a font. Charis SIL has small caps built in, but ADE cannot access them. But using SIL TypeTuner, you can create a small caps version by extracting the small caps from the SIL font.

1.5 Embedding of the Font Software into electronic documents or Internet pages is only permitted under the absolute assurance that the recipient cannot use the Font Software to edit or create a new document (read-only). It must be ensured that the Font Software cannot be fully or partially extracted from said documents.

It is possible to encrypt fonts (obfuscate) in the folder to prevent their use by simply extracting them. Actually is is not really DRM but it passes the test identified above. ADE supports this but uses a slightly different scheme that the standard.